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Is SEI Investments Company (NASDAQ:SEIC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
SEI Investments Company (NASDAQ:SEIC) was in 27 hedge funds' portfolios at the end of March. The all time high for this statistic is 37. SEIC has seen a decrease in enthusiasm from smart money of late. There were 33 hedge funds in our database with SEIC holdings at the end of December. Our calculations also showed that SEIC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to take a look at the latest hedge fund action surrounding SEI Investments Company (NASDAQ:SEIC).
Do Hedge Funds Think SEIC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SEIC over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in SEI Investments Company (NASDAQ:SEIC) was held by Royce & Associates, which reported holding $76.8 million worth of stock at the end of December. It was followed by Sunriver Management with a $41.6 million position. Other investors bullish on the company included Markel Gayner Asset Management, Goodnow Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Sunriver Management allocated the biggest weight to SEI Investments Company (NASDAQ:SEIC), around 7.77% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, dishing out 2.07 percent of its 13F equity portfolio to SEIC.
Because SEI Investments Company (NASDAQ:SEIC) has faced bearish sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of funds that decided to sell off their positions entirely heading into Q2. It's worth mentioning that Ravi Chopra's Azora Capital dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $10.1 million in stock. John Khabbaz's fund, Phoenician Capital, also said goodbye to its stock, about $8.6 million worth. These moves are important to note, as total hedge fund interest dropped by 6 funds heading into Q2.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as SEI Investments Company (NASDAQ:SEIC) but similarly valued. These stocks are Amedisys Inc (NASDAQ:AMED), Gentex Corporation (NASDAQ:GNTX), West Fraser Timber Co. Ltd. (NYSE:WFG), Vornado Realty Trust (NYSE:VNO), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Carlisle Companies, Inc. (NYSE:CSL), and Service Corporation International (NYSE:SCI). This group of stocks' market valuations are closest to SEIC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMED,26,324073,6 GNTX,35,537554,-1 WFG,25,580726,25 VNO,25,216181,2 MRTX,57,2867424,1 CSL,18,186375,1 SCI,23,709728,-5 Average,29.9,774580,4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $775 million. That figure was $305 million in SEIC's case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 18 bullish hedge fund positions. SEI Investments Company (NASDAQ:SEIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SEIC is 32.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately SEIC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SEIC investors were disappointed as the stock returned 2.6% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.